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What should be the enterprise value of the firm

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Reference no: EM132467665

Problem - A firm is expected to have free cash flow of $3 million next year, after that it will grow at 5% forever. The equity cost of capital of the firm is 12% while the weighted average cost of capital is 10%. The firm has $1 million cash, $6 million debt, and 5 million shares of stock.
Required -

(a) What should be the enterprise value of the firm?

(b) What should be the stock price per share?

Reference no: EM132467665

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